14.30 - 16.15

Robert Rubinstein (The Netherlands)
Chief Executive Officer - TBLI Conference B.V./TBLI Consulting B.V.

Manishi Raychaudhuri (India)
Head of India Research, Market Strategy - BNP Paribas GECD Asia Pacific

Socially Responsible Investing in India – Challenges and Opportunities

1. SRI is in its infancy in India
a. Any India dedicated SRI funds?
b. Total quantum of SRI money in India
c. Total quantum of SRI money in the world and Asia

2. CSR initiatives remain largely a “check box” exercise
a. CSR declarations made mandatory in …
b. Environmental and Social responsibility
c. Corporate Governance related disclosures

3. Out of ESG, “G” is taken seriously by investors
a. Traditional view of “ES” is potential distraction and loss of focus from fiduciary duty to shareholders

4. Even corporate governance has been difficult to judge by traditional methods
a. Satyam fraud in early 2009: Satyam satisfied almost every good governance criteria
b. Market seems to be a better judge of governance and disclosure standards

5. Performance of SRI investments in India
a. Performance of S&P ESG India index vs Nifty 50
b. Globally – Domini Social index 400 vs S&P 500 or MSCI World

6. Several large frontline companies have violated environmental norms
a. LokAyukt report on illegal mining in Bellary – condemning JSW, Sesa Goa, NMDC
b. Human rights violation – Amnesty International report on Posco, other instances

7. But times they are changing
a. Ministry of Environment and Forest became active under the previous minister
b. New Land Acquisition Bill drafted

8. Several companies in social entrepreneurship, green energy etc
a. Some listed,
b. Many unlisted

9. SRI funds in India – Still in infancy but growing
a. ABN Amro has the only SRI funds currently launched in 2005

Rabinder N. Malik (Japan)
Senior Visiting Fellow/Coordinator, TERI-Japan - TERI-Japan

India's Sustainable Growth - An Overview

In our interdependent world, whatever happens in India will have an impact on the rest of the world, and vice versa. The world is still recovering from its worst global financial crisis but it cannot ignore the most critical issues of energy and environment which are threatening to make the earth less habitable. An unprecedented growth in demand for energy resources is predicted in the coming years, while the fluctuating global oil prices and the pace of global warming make it clear that the future global economic growth cannot follow the same fossil-fuel-based path that the industrialized countries have taken in the past. The developing countries must not repeat the mistakes of the industrialized countries. The world thus needs to focus on investing in renewable energy resources, eco-friendly infrastructure and energy efficiency, and to help the developing countries by providing them access to energy options and enhancing their adaptive capacities through financing and technological resources to cope with the challenge of global climate change.

India’s remarkable economic success story goes hand-in-hand with serious sustainable development challenges such as inadequate infrastructure, bureaucracy, corruption, poverty, lack of water, sanitation and electricity for nearly one-fourth of the country’s population. For over a decade, India has experienced one of the fastest economic growth rates in the world, which has brought immense benefits to the people of India -- incomes have increased, poverty has fallen and industrialization has accelerated. The needs of the millions of consumers at the bottom of the pyramid who are quickly moving out of poverty are addressed through what is known as “frugal engineering” or “Gandhian engineering” – which reflects the competency of Indian engineers to produce a much cheaper and innovative final product that does the same job as a more expensive complexly engineered product, as for example, Tata Motors' frugal, low-cost Nano car. The concept here is: "Getting more (services) from less (resources) for more (people)."

The robust economic growth of India creates significant challenges for managing pressures on natural resources and the environment, necessary for sustaining these accomplishments. Recognizing these challenges, the Indian government launched in 2008 India’s first National Action Plan on Climate Change (NAPCC), putting in place measures which would promote India’s development objectives of maintaining high economic growth rates while also yielding co-benefits for addressing climate change effectively. TERI’s Business Council for Sustainable Development (TERI-BCSD India), which is an independent platform for corporate leaders to address issues related to sustainable development, has made serious efforts to engage the corporate sector in the implementation of the NAPCC by identifying new business models requiring a renewed responsibility on the part of the private sector to adhere to existing environment-related laws, standards and codes. The objective is to promote green economy that is driven by business, supported by the government, and embraced by the people in India.

Sumantra Sen (India)
Principal Researcher - Responsible Investment Research Association

Building Blocks for Mainstreaming ESG - Next Steps for Regulation, Research and Training

The integration of ESG issues into the financial markets in India is, at best, at an infancy stage. The stock exchanges, regulators and other enablers have taken some crucial steps but the enabling environment continues to remain weak. The country had its first sustainability indicator in 2008 - the IFC-sponsored S&P ESG India Index. But three years on, it has not been able to make any noticeable impact, in spite of outperforming the broad index in recent years. The Ministry of Corporate Affairs has launched the Voluntary Guidelines for Corporate Responsibilities but although the response from the companies in the form of sustainability reports is showing positive traction, the number of companies consistently reporting and the quality of disclosures leave a lot to be desired. Amongst the stock exchanges, National Stock Exchange of India (NSE) took an initiative along with United Nations Principles for Responsible Investment (UNPRI) to discuss and demystify the ESG issues that pose a threat or provide opportunity for Indian business at an event in 2009. However, there has been limited follow-up on the deliberations at the conclave with very little ground covered in the area of policy or procedures.

The good news is that there is growing recognition - an emerging consensus that the ESG issues play a role in developing business and the country. Planning Commission acknowledged that as India continues to grow over the next decades, it needs to do so sustainably and has formed an Expert Group to advise the government on the impact on sustainability factors. Investment Managers have confirmed that while many of them do not use objective ways to factor them in, they consider ESG issues to be important in long term investment decisions. What is critically required now is to take this momentum to the next level. The stakeholders need to leverage some of the drivers already in place and establish best practices in the areas of: (a) Policy- by engaging the regulators, exchanges and the institutional investors in order to create a robust framework (b) Disclosure- by motivating and enabling the companies to manage the ESG issues for superior performance and (c) Cutting- Edge Research & Training- to build a stronger business case and to enhance professional capability in facilitating ESG integration.